Biting the Hand that Feeds You

I saw this link come across Twitter today courtesy of Mike Laverick (@Mike_Laverick, http://www.rtfm-ed.co.uk) and wanted to make a couple comments about it because it’s a subject really gets me worked up…

This isn’t academic for me, I WAS one of those SPs that counted on HP as a partner. If I still worked there, and I saw that HP was trying to sell me millions of dollars of hardware to support my IaaS business on one hand and was launching a competing service on the other, I’d be pissed.

L0ok, I understand the desire to make more money, especially when you are a publicly traded company that has all sorts of high-level issues (exhibits A, B, C, D, E, F, and G for your examination), but there’s no excuse for being short-sighted and doing it at the expense of your customers. Making an announcement like this is a direct kick in the face to all of the hosting companies, co-lo facilities and service providers that have partnered with HP or used HP to build out services that are marketed to customers. By selling hardware to service provider customers (like the BladeSystem Matrix) for use in IaaS deployments and then jumping into direct competition with those customers, they are breaching one of the fundamental (IMHO) tenets of trust between an SP and a vendor. HP appears to be moving directly into the enterprise hosting and cloud service markets, and it’s going to be at the expense of the partners who are doing business with them.

So who is doing it right? VMware seems to me to be near the top of the list. Despite being owned by EMC, they have been religiously neutral (and even sometimes openly critical) towards their storage-centric parent. They have openly said that they have no plans for building their own data centers or offering services to customers directly, and have instead been very out front with empowering service provider partners (ignore the VSPP debacle for now, let’s see what happens at PEX2011 first). For that matter, EMC hasn’t been bad in this regard either. With the exception of the now-closed Atmos-as-a-Service product (and maybe Mozy, I’m still on the fence with this one) they haven’t offered any services that would compete with their service provider partners, and they have spent a lot of time and effort to engage with and accelerate the business of those SP partners. Cisco also puts a lot of focus on service providers and has resisted the temptation to provide compute or network capacity directly. Hey, did you see something in common between those three companies I mentioned? Interesting…

Of course there are others. NetApp stays out of their customer’s space (probably for different reasons than EMC) as does Dell for the most part. On the flip side, there are some companies that very aggressively compete with their customers. Microsoft deserves a spot at the top of this list, especially as they’ve pushed hosting partners out of the Exchange and SQL markets. IBM has long competed on both the hosting as well as the services side of the house, however their size hasn’t put them in direct competition with the smaller hosting companies yet. In fact, IBM subs out a good bit of their application hosting business to partners rather than hosting it out of an IBM data center directly.

At the end of the day, partnership is a two-way street. If you want SP customers to buy and evangelize your solutions because they enable a segment of business, you can’t then wait until the market grows to a certain point and jump into that segment as well. Even if you have the best hardware out there, losing that “trusted partner” label will hurt in the long term.

I’d love to hear others thoughts here. Is HP’s launch out of bounds? How should SP partners react? Did I miss anyone who needs to be called out on the positive or negative side of the ledger? Leave a message below and let me know.